Zomato’s Q3 net profit zooms 283% QoQ to Rs 138 Cr led by growth in food delivery, Hyperpure
Zomato’s food delivery growth was fuelled by a surge in the monthly active restaurants base, helped by the entry of new restaurants and the expansion of coverage area of existing restaurants.
Food and grocery delivery firm posted a profit for the third straight quarter at Rs 138 crore in Q3 FY24, up from a loss of Rs 347 crore in the same period last year. This was bolstered by strong performance of food delivery and its business-to-business supplies business Hyperpure.
Zomato’s net profit surged by a whopping 283% compared to Rs 36 crore earned last quarter.
The company’s operating revenue rose 69% to Rs 3,288 crore against Rs 1,948 crore in the year-ago quarter. Food delivery—Zomato’s largest business by revenue—earned operating revenue of Rs 1,704 crore against Rs 1,151 crore in December quarter last year.
Income from B2B vertical Hyperpure doubled to Rs 859 crore against Rs 421 crore in the year-ago period.
Going Out—the sum of Zomato’s dining out and events businesses—was enlisted as a separate reportable segment effective July 1, 2023, the firm said in its filings with the stock exchanges. The vertical reported an operating revenue of Rs 73 crore against Rs 58 crore last year.
Zomato’s total expenses rose 36% year-over-year to Rs 3,383 crore compared to the previous year.
Zomato Gold boosts food delivery
Zomato’s food delivery growth was fuelled by a surge in the monthly active restaurants base, helped by the entry of new restaurants and the expansion of coverage area of existing restaurants, according to the Deepinder Goyal-led company.
The gross order value (GOV) grew 27% YoY to Rs 8,486 crore last quarter, while average monthly transacting customers grew to 18.8 million, despite muted discretionary consumption in the quarter.
While the GOV was below expectations, it is still higher than some of the players in the restaurant industry, Zomato told its investors on Thursday.
“One of the things driving the growth of our food delivery business is the fact that our platform is still underserved from a supply standpoint. The monthly active restaurant base on our platform has grown by more than 20% YoY in Q3 FY24,” the company said.
Another major push came from its Gold programme, which was reintroduced in the last quarter of FY23, recording over 1.8 million sign ups.
However, Zomato acknowledged that the pricing of the programme is much lower than it wants it to be since the focus is on acquiring and re-acquiring customers. Customers have more than one option, making it necessary for Zomato to stay competitive with pricing, it added.
“We are also seeing a lot of customers switching platforms at the time of membership renewal depending on who is offering the lowest price. While there is no debate on the need for a loyalty program, we are yet to get to sustainable pricing here,” Rakesh Ranjan, CEO of the food delivery business, added.
Zomato introduced a platform fee of Rs 4 for all customers, including Gold members, earlier this month in a bid to improve unit economics. The move has helped improve margins, according to Akshant Goyal, Chief Financial Officer of Zomato.
“We will continue to tactically use levers like these to optimise both growth and margin expansion. Most importantly, as we do this, we will also continue to ensure the viability and well-being of each of our stakeholders—our customers, restaurant partners and delivery partner,” Ranjan noted.
Robust demand drives Blinkit growth
Zomato’s quick commerce segment made an operating revenue of Rs 644 crore in Q3, up 113% YoY from the same period last year. This was driven by a robust uptick in demand during the festive season.
GOV grew 103% YoY to Rs 3,542 crore while average order value stood at Rs 635 against Rs 553 in Q3 FY23. Blinkit closed the quarter with a total of 451 stores with average GOV per day, per store grew 17% QoQ reflecting “healthy same store sales growth,” according to Albinder Dhindsa, CEO of Blinkit.
While most of the GOV growth was order volume-led, part of it was also driven by an increase in average order value, which continued to benefit from a higher mix of high average selling price categories such as electronics, festive needs, home décor, among others, Dhindsa said.
Zomato added that nearly 90% of Blinkit’s GOV currently comes from the top eight cities, emphasising the need to maintain the pace of growth.
Ad monetisation—a promising proposition for Blinkit—grew at double the pace of GOV growth over the last one year making the transacting frequency on Blinkit among the highest in any consumer internet category in India, according to the Gurgaon-based company.
Edited by Megha Reddy